Jim’s Mailbox

Posted at 7:52 AM (CST) by & filed under Jim's Mailbox.

Dear Wolfgang,

When in doubt, and you are a function of the IMPACTS government ECONOMIC AFFAIRS just have the rules changed by FASB.

Jim

Jim/Bill,

Damned if you do,

Damned if you don’t.

“……as a result of the spike in yields in the last summer, this massive portfolio suffered substantial paper losses”

Raise rates and you kill economic growth, and take massive hits on the value of your portfolio.

Lower rates and you fuel the speculative bubbles, and increase corp. borrowings as well as adding to your portfolio which you are trying to downsize.

And this makes you wonder even more!

“Under GAAP, an institution is required to report trading securities and those available for sale at fair or market value, rather than at face value. The Fed reports its balance-sheet holdings at face value.”

CIGA Wolfgang Rech

Fed Net Worth Turns Negative Following Record $66BN In Paper Losses
December 12, 2018
While the Fed has been engaging in quantitative tightening for over a year now in an attempt to shrink its asset holdings, it still has over $4.1 trillion in bonds on its balance sheet, and as a result of the spike in yields in the last summer, this massive portfolio suffered substantial paper losses which according to the Fed’s latest quarterly financial report, hit a record $66.453 billion in the third quarter, raising questions about its strategy at a politically charged moment for the central bank, whose “independence” has been put increasingly into question as a result of relentless badgering by Donald Trump.

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